1. Field of the Invention
The invention is related to the field of methods for determining investor payout from a common investment fund based on selections made by individual investors of their expectations of occurrence of external events not related to investment returns.
2. Background Art
A very common investment vehicle used by small investors is shares in “open-end” mutual funds. Open-end mutual funds are a pool of capital from individual investors which is itself invested in other investment vehicles. Open-end mutual funds issue new shares on receipt of cash from investors. The number of shares purchased for any particular sum of money is based on a per-share value at the time of purchase. Similarly, an open-end fund investor may liquidate some or all of his fund holdings by sale of fund shares, which then are removed from the fund's “float” (number of shares outstanding). The per-share price is typically calculated as the total value of all the investments owned by the mutual fund, plus cash on hand, divided by the number of shares outstanding at the time of the particular purchase or sale. By this method of calculation, when the mutual fund accepts newly invested cash, no change in the per-share price of the mutual fund takes place as a result, because the total assets owned by the fund increase exactly as the amount of newly invested cash and the number of shares increases relative to the exact per-share price.
Mutual funds, including open-end funds have many different investment objectives, and therefore invest fund assets in various investment vehicles, although most funds invest primarily in publicly traded stocks and bonds. As the value of the investment vehicles changes, the per-share value of the mutual fund will also change correspondingly. A common type of open-end mutual fund is known as an “index fund.” Index funds generally invest fund assets in shares of stock which underlie one or more of the commonly tracked stock indices, for example the S & P 500 index (a trade name of Standard and Poor's Inc.) or the Dow Jones Industrial Average (a trade name of Dow Jones & Co., Inc.). Because index funds invest in the stocks which underlie the particular index, the investment performance of the typical index fund will closely correspond to the performance of the index to which the fund is tied. Many other types of mutual funds exist. Each of these mutual funds has a stated investment objective and each fund invests the fund's assets in investment vehicles which are intended to fulfill the investment objectives of the particular mutual fund.
Irrespective of the investment objectives of a particular mutual fund, the individual investor in a mutual fund has substantially no ability to select the investments made by the fund. These investments are typically selected by a fund manager or other investment advisor on behalf of the fund. In some cases, an individual investor may desire to make some selection within the framework of a particular mutual fund which enables the individual investor to affect the total return he obtains by investing in the mutual fund. In particular cases, the individual investor may have some knowledge or expertise which is not related to selection of investment vehicles, which the investor would desire to use to enhance his investment returns. For example, some investors have good working knowledge of professional sports franchises, political parties, or other non-financial endeavors and their present and expected performance, and may desire to use that knowledge or expertise to enhance his investment performance with respect to that of an ordinary mutual fund.
It is desirable to have an investment vehicle operating within the framework of a mutual fund which provides for investor selection of various investment options therein calculated to enable individual investors to affect their investment return.